Tax Implications When An Artist Donates To Charity

One is eligible for tax deductions when one donates to charity. Individuals can claim 50 per cent to 100 per cent as a deduction for the donations made to specified charitable institutions or government relief funds under section 80G of the Income Tax Act. This deduction is available to encourage individuals to encourage philanthropic activities. 

Can an artist claim tax deductions when he or she donates to charity? Let us take a look. 

Under section 80G, a 100 per cent deduction is available for donations to specific organisations like the National Defence Fund and Prime Minister’s National Relief Fund. In the case of other eligible charitable institutions, the donation is 50 per cent. 

However, there are certain rules which need to be kept in mind when it comes to such deductions. 

“The deductions for donations under section 80G  are only available when made in cash (up to Rs 2000 only), cheque, or demand draft. Any donations made in kind are not allowed as a deduction,” says Abhishek Soni, CEO, Tax2Win, an income tax portal. So donations like clothes, food, etc. are not eligible. 

What Happens When An Artist Donates To Charity 

Therefore, when the artists donate a piece of art like a painting, handicraft, etc, such donation will not be eligible for deduction under section 80G of the Income Tax Act. 

“However, if the artists donate the sale proceeds from an auction of their artwork to the specified funds, they can claim a deduction for the donation made under section 80G of the Income Tax Act,” says Soni. 

As mentioned, no institutions are eligible for donations. One should first be sure that the institution is eligible for a tax deduction. To claim the deduction, a stamped receipt from the institution to which the donation is made is required. It should contain details like the name, PAN, and registration number of that institution. Remember, form 58 is required when a donor wants to claim a 100 per cent deduction. This form needs to be attached along with their income tax returns to claim the deduction. 

So, to get a tax deduction, artists should donate sales proceeds from their art. This way, they can contribute to society and get tax benefits.